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Treasury Auctions Off $35 Billion In 5 Year Bonds At 2.124%

Tyler Durden's picture




 

A rather boring 5 year auction just closed at the earlier time of 11:30 due to the Bernanke tragicomedy. The $35 billion in bonds (nothing arcane about the CUSIP today: QF0, although do look for this CUSIP to be aggressively monetized in the next few POMOs) were sold at a 2.124% yield, in line with expectations, and at a 2.77 Bid To Cover, modestly better than the last auction which priced at 2.74 (and in line with the LTM average of 2.79). Indirects took down 40.0%, with Directs accounting for 11.2% and the balance or just under 50% going to Primary Dealers. And like yesterday, the Primary Dealer interest declined broadly, coming at a surprisingly high 25.7% hit rate. The Fed's SOMA retained $2.2 billion. With this auction, the debt ceiling is about $23 billion away, even though we have another $24 billion auction tomorrow. Oh well, we'll cross that bridge when we come to it.

 

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Wed, 04/27/2011 - 11:48 | 1211869 Cleanclog
Cleanclog's picture

Never mind Santelli's grade - I give it a yellow with a smiley face. PDs SOMA POMO does it matter?

Wed, 04/27/2011 - 11:50 | 1211870 lolmao500
lolmao500's picture

Economic apocalypse, yes we can!

Wed, 04/27/2011 - 11:48 | 1211872 Hard1
Hard1's picture

No worries, we have .000001% debt capacity vs the limit.  But limit increases are limitless.  Serously, no pun intended.

Wed, 04/27/2011 - 11:57 | 1211888 Hephasteus
Hephasteus's picture

Honey I bought some new drapes for the lincoln bedroom.

Bitch. You know we can't afford that till we get our credit card limit raised. Why couldn't you just wait!!!

Wed, 04/27/2011 - 11:55 | 1211894 lolmao500
lolmao500's picture

Going over the debt ceiling.. isn't that illegal? Yeah I know the FED doesn't care about the legality of what they do.

Wed, 04/27/2011 - 12:00 | 1211913 bingaling
bingaling's picture

With this auction, the debt ceiling is about $23 billion away, even though we have another $24 billion auction tomorrow. Oh well, we'll cross that bridge when we come to it.

People of the United States versus The Federal reserve and US treasury coming to a theater near you . All debt sold over the ceiling is unvalid therefore does not add to the US deficit .

Wed, 04/27/2011 - 12:16 | 1211953 cosmictrainwreck
cosmictrainwreck's picture

hot damn! we have a solution! just print the shit out of that USD, and no effect on the deficit. beautiful

Wed, 04/27/2011 - 12:37 | 1212048 Kyle Reese
Kyle Reese's picture

So did the hacking of the Playstation network have any effect on the Yen?

Wed, 04/27/2011 - 17:35 | 1213701 Zero Govt
Zero Govt's picture

who would loan the fiscal retards in Washington money for 5 years at 2.20% ??? 

there's a sucker born every minute, is it Bernanke or the total idiots at the Bank of England?

Wed, 04/27/2011 - 17:47 | 1213788 honestann
honestann's picture

I "sorta get" bonds, but never dabbled in them or had interest in them.  In the long term I kept my assets mostly in productive equipment, and in the last few years in gold and silver.

So I have a question that might be "newbie level" for anyone who understands bonds.

I understand the point of buying a bond for the past 20 or 30 years while the interest rate paid was dropping.  During that time you had 2 viable options:

#1:  Collect for the entire term of the bond.

#2:  Sell the bond at any time since the value of the bond increases as interest rates drop.

What I don't understand is why anyone in their right mind would buy a government bond today.  With interest rates only having one possible direction to change (up), it seems like an insane bet or "investment"... unless somebody thinks the bond interest rates being paid are above the real inflation rate?  Does anyone consider a government bond to be a real investment?  What am I missing?

Bonds seem almost like a completely different investment vehicle when interest rates fall versus when they rise (as they must from 0%).  What am I missing.  It makes no sense to me.

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